Lilly’s COVID-19 Antibody Drugs Are Best Sellers This Quarter, But Investors Aren’t As Excited

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Eli Lilly’s COVID-19 monoclonal antibody treatments generated $ 810.1 million in global sales in the first three months of the year, but investors remain unenthusiastic about therapies that are expected to have a short shelf life. Lilly’s LLY, -2.22% of the stock fell 2.0% in trading on Tuesday after the drugmaker announced first-quarter earnings for 2021.

The immediate silver lining is that Lilly’s COVID-19 antibody therapies are already one of the company’s best-selling drugs, second only to diabetes drug Trulicity, which generated $ 1.45 billion in sales in the first quarter of 2021. However, sales of the antibodies did not take place. the $ 73 million consensus and overall revenue also fell short, according to Mizuho Securities analyst Vamil Divan. Read: Vaccines are here. That is no reason to suspend the search for effective COVID-19 treatments. Lilly’s COVID-19 antibody treatment, bamlanivimab, had initially received authorization for emergency use in November. The Food and Drug Administration then licensed a combination of bamlanivimab and another monoclonal antibody, etesevimab, in February; However, as new variants began to circulate in the US that decreased the effectiveness of bamlanivimab, federal regulators withdrew distribution in the worst-affected states before completely withdrawing the EUA for standalone therapy in mid-April. . This, coupled with increased vaccination rates, lower-than-expected antibody utilization, and restructuring of the contract Lilly signed with the U.S. government for his antibody treatment (as a result of the revocation balmlanivimab’s EUA) set the stage for a more faltering financial situation. performance. “We assumed that lower COVID-19 antibody sales would affect the quarter and guidance,” Divan wrote in an investor note. “But the scope of the [overall] miss, especially for important products like Taltz and Verzenio, surprises us ”. It would appear that new drugs on their way to blockbuster status in the first half of the year would be a reason to cheer investors. But much of Lilly’s quarterly disclosure focused on separating the financial performance of its COVID-19 antibody drugs from the company’s core revenue base, which includes Trulicity and the breast cancer drug Verzenio, and looking for reassure investors about the robustness of these products. “We find that those who score the accuracy of the sales model [there is] maybe a bit of a disappointment, ”Lilly CEO David Ricks said Tuesday, according to a FactSet transcript of the earnings call. “Still, underneath all of that is a strong and growing core business for Lilly and a significant number of positive, even compelling, pipeline readings in the quarter to support long-term growth in all of our core therapy areas.” This is likely to be an ongoing problem for drug makers that have been involved in the pharmaceutical arms race during the COVID-19 pandemic. Developing therapies or vaccines that will keep people healthy and economies vibrating is a good thing, and even temporarily lucrative, but spending millions of dollars to develop and manufacture a product that may no longer be needed in a few years is much less palatable to do. long time. pharmaceutical investors. Lilly said her COVID-19 antibody therapies helped reduce gross margins, noting that there were additional charges based on the over-supply of bamlanivimab after utilization slowed and the USA was revoked. In addition, the company’s research and development costs increased 21% year-over-year, driven “primarily” by $ 220 million in spending on antibody treatments and on Olumiant, a rheumatoid arthritis drug it markets with Incyte. Corp. INCY, -0.98% being tested as a treatment for seriously ill COVID-19 patients. See Also: Eli Lilly Asks FDA To Revoke USA For COVID Antibody Treatment Only To Accelerate The Transition To Combination Therapy Additionally, Lilly’s Updated Financial Guidance For The Year Is Expected To Be Affected By Lower Demand For antibodies and higher R&D costs. Lilly CFO Anat Ashkenazi told investors that the company had reduced the revenue range for these therapies from $ 1 billion to $ 1.5 billion in 2021, from the previous expectations of $ 1 billion to $ 2 billion. “Based on the vaccine launch in major markets, current antibody utilization rates, the existing US government supply of bamlanivimab, and the transition to supply only bamlanivimab and etesevimab administered together in the US, we believe that this updated range contemplates a variety of potential scenarios. ” he said. Lilly shares are up 8.1% year-to-date, while the S&P 500 SPX, + 0.04%, is up 11.5%.